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Out of Pocket Limits Changes Begin in 2014

In employers’ 2014 plan year, all companies must ensure their non-grandfathered plans adhere to a single out of pocket (OOP) maximum for their employee’s health care plan expenses. This requirement applies to both fully insured and self-insured plans. Going forward, the OOP limit must include all spending on medical, prescription drugs and both mental health and substance abuse treatment benefits. Actuarial estimates indicate this change could increase employer health care costs between 1.5% and 2% next year.

These OOP maximums will be the same as those imposed for health savings account high deductible plans in 2014 (these maximums will be identified later this year). For 2013 plan years, maximum OOPs are $6,250 for single coverage and $12,500 for family coverage. Any group plan that uses a single vendor for claims administration must devise a unified OOP maximum at the beginning of the 2014 plan year. Unlike today, the new OOP maximum applies to all in-network copays, coinsurance and deductible expenditures for all covered expense categories. If you use multiple vendors, your plan will be compliant for the 2014 annual OOP limit if:

  • Your plan’s major medical coverage complies with maximum OOP requirements. (This excludes items like prescription drug coverage and pediatric dental procedures).
  • Your plan offers a separate OOP maximum for non-medical benefits (e.g., prescription drug coverage), not to exceed $6,250 for single coverage and $12,500 for family coverage, price indexed for 2014.

If your plan has separate mental and substance abuse benefits, the Mental Health Parity Act forbids separate limits. Neither insurers nor group health plans can impose OOP maximums on medical benefits that provide a separate maximum on mental health and on substance abuse treatment.

In closing, if you currently utilize multiple claims payers such as third-party administrators and pharmacy benefits management firms, a special transition rule exempts your plan until 2015 plan year to enable you to coordinate a single OOP maximum with your vendors.

These regulations are complex and as employers comply, many questions will arise during the implementation phase. We are currently assisting organizations with these changes and we encourage you to contact us if you have questions or concerns; properly complying with these changes should not be taken nonchalantly. Please feel free to contact me at 732.395.4251 or

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